Several studies support the hypothesis that the pathogenesis of early lung injury in clinical acute lung injury (ALl) depends on interactions between coagulation and inflammation in the lung. Activated protein C (APC) is a very promising new therapy that has both anticoagulant and anti-inflammatory properties. APC is effective in animal models of sepsis as well as in the treatment of certain patients with severe sepsis. There are several important similarities in the pathogenesis of sepsis-induced organ failure and lung injury in ALl, including evidence for coagulation and inflammation dependent lung injury. Because our preliminary data indicates that protein C deficiency occurs in ALl patients with either an infectious or non-infectious clinical risk factor, administration of APC for the treatment of ALl needs to be tested in a broad spectrum of patients who develop ALl. The central hypothesis of this proposed randomized clinical trial is that APC will restore the normal anticoagulant balance in clinical ALl and will reverse a significant fraction of the inflammation-dependent lung injury. Therefore, in Aim 1, we will conduct a randomized, placebo controlled, double-blind phase II trial of 120 patients to test the potential therapeutic value of APC for the treatment of clinical acute lung injury in adult and pediatric patients. The primary objective will be to test the impact of APC on the (1a) pulmonary circulation (dead space fraction and pulmonary arterial pressure), (2b) severity of clinical lung injury (oxygenation, respiratory compliance, and lung injury score), (1c) the need for positive pressure mechanical ventilation (ventilator free days), and (1d) the severity of systemic injury (non-pulmonary organ system failure). Aim 2 studies will determine the effect of APC (versus placebo) treatment on biologic markers of coagulation and inflammation and test the hypothesis that normalization of these biochemical markers will correlate with improved physiological and clinical outcomes measured in Aim 1. Aim 2 will also study the effect of APC (versus placebo) treatment on cell-specific indices of activation and injury to the endothelium, fibroblasts, and the alveolar epithelium. A proteomics analysis will analyze for differences in the protein composition of air space samples in placebo versus APC treated patients.